EXPLORING THE INDISPENSABLE PARTY: A SURVEY OF COMMON CONTEXTS FOR RULE 19 CLAIMS.

• Author: O'Keefe, Jacqueline A.

1. INTRODUCTION 856 II. RULE 19 OVERVIEW 857 A. 19(a): Persons Required to Be Joined if Feasible 857 B. 19(b): Indispensable Parties 859 III. COMMON CATEGORIES FOR INDISPENSABLE PARTIES 861 A. Sovereign Immunity 861 B. Real Property 865 C. Insurance 870 D. Contracts 875 E. Corporate Disputes 878 IV. CONCLUSION 882 I. INTRODUCTION

   In the American legal system, the plaintiff has considerable control over who will be a party to litigation. Rule 19 of the Federal Rules of Civil Procedure, however, limits this power by providing a framework with which courts determine if joinder of absent parties is required for just adjudication. (1) Because of the Rule's potential to sweep a broad range of absent parties into the "necessary" or "required" classification, whether a particular lawsuit must be dismissed in the absence of a certain person must be determined in the context of particular litigation. (2) Thus, careful consideration of factual similarities between Rule 19 cases, and the ways in which courts approach them, are particularly instructive.

   Rule 19 can arise in virtually any circumstance. However, five broad categories of cases contain a wealth of Rule 19 jurisprudence that provide insight into when a party will be deemed indispensable. Cases in which sovereign bodies are implicated, or disputes wherein contracts, real property, insurance, or corporate law are at issue, are common contexts for illustrative Rule 19 analysis of indispensable parties. Within these categories, the reasoning that most prominently guides courts' analysis differs based on the nature of the action and can be extrapolated to a wide range of Rule 19 cases. (3)

2. RULE 19 OVERVIEW

   As an initial matter, it is important to understand that Rule 19 is a flexible test, capable of bending to address the wide range of factual circumstances to which it must be applied. Rule 19 prescribes no specific weight to be given to any individual factor and leaves it to the courts' discretion to determine what "in equity and good conscious" is the appropriate balance. (4) Courts even note that the factors enumerated in the Rule are not an exhaustive list of potential considerations. (5) Given the considerable latitude courts have in analyzing an issue under Rule 19, it is helpful to first establish how the factors are generally applied and interpreted, regardless of the context.

   1. 19(a): Persons Required to Be Joined if Feasible

      In order for a court to reach the "indispensable" analysis under 19(b), it must first establish the threshold requirements of a "necessary" party under 19(a)(1) and that the absent party is infeasible to join. (6) Many of the 19(a) factors involve similar considerations as those under 19(b). Thus, while similar concerns will arise in both 19(a) and 19(b), the "necessary" analysis often demands a less certain showing of prejudicial effect. (7)

      The first factor of 19(a)(1) asks whether, in the absence of the party, the court can accord complete relief among existing parties. (8) This factor requires the court to look only to the present parties and consider the quality of relief it would be able to provide. "Complete" relief is generally interpreted to be that which is not "hollow," but instead achieves the objective of the lawsuit. (9) In conducting the Rule 19(a)(1) analysis, the court determines if the absence of the party would preclude the district court from fashioning meaningful relief between the parties. (10) If meaningful relief would force an absent party to take some particular action or to refrain from action to achieve the desired result, that person may qualify as required under (a)(1). (11)

      The second factor of 19(a) requires the court to identify the absent party's interest in the action, (12) the scope of which informs the prejudice analysis in 19(b). Under this factor, the court is directed to consider whether the absent party is so situated that disposing of the action in the party's absence may as a practical matter impair or impede the person's ability to protect the identified interest. (13) It is at this point of the analysis that courts may inquire into the ability of any of the existing parties to adequately represent the absent party's interests. (14) Although often analyzed during the "necessary" portion of the Rule 19 process, some courts address the ability of existing parties to represent the absent party's interest at the "indispensable" phase, or at times in both 19(a) and 19(b). (15)

      The final factor asks whether disposing of the action in the person's absence may leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest. (16) Properly considered, a court must entertain any non-frivolous claimed interest without inquiring into the merits of the case since the purpose of Rule 19 is to give the absent party the ability to be heard before the court makes a finding on the merits. (17) It is important to note that this factor is primarily concerned with inconsistent obligations, not outcomes. (18) The First Circuit provided a helpful explanation of the distinction:

      "Inconsistent obligations" are not... the same as inconsistent adjudications or results. Inconsistent obligations occur when a party is unable to comply with one court's order without breaching another court's order concerning the same incident. Inconsistent adjudications or results, by contrast, occur when a defendant successfully defends a claim in one forum, yet loses on another claim arising from the same incident in another forum. (19) After conducting the 19(a) analysis, if the court determines that the absent party is one that is necessary for adjudication, it then considers if the party can feasibility be joined. (20) If it can, the party is joined, and the case may proceed. However, if the absent party cannot feasibly be joined, the court will continue to the "indispensability" analysis under 19(b). (21)

   2. 19(b): Indispensable Parties

      If after the court makes the determination that an absent party is necessary and cannot feasibly be joined, the next inquiry is whether "in equity and good conscience" the action should proceed among the existing parties or whether it should be dismissed. (22) In assessing the Rule 19(b) factors, courts adopt a flexible, case-specific approach. (23) District courts are afforded substantial discretion in weighing the Rule 19(b) factors and in determining how heavily to emphasize certain considerations in deciding whether the action should go forward in the absence of a necessary party. (24) Accordingly, the decision whether to dismiss an action for failure to join an indispensable party is often described as "more in the arena of a factual determination than a legal one." (25)

      The first Rule 19(b) factor requires the court to determine the "extent to which a judgment rendered in the person's absence might prejudice that person or the existing parties." (26) This factor often overlaps with the Rule 19(a) analysis, since both require the court to determine the potential for prejudice to existing and absent parties. (27) Because of the importance of identifying the interests at issue for indispensability, courts commonly dedicate the bulk of their interest analysis to 19(b). (28)

      The second Rule 19(b) factor calls for the court to examine "the extent to which any prejudice could be lessened or avoided by" protective measures in the court's judgment or other measures appropriately shaping the relief. (29) This factor directs the court's attention to the possibility of remedies other than those requested by the plaintiff that would minimize the prejudicial effect of proceeding without the necessary party. The most common of these alternative remedies, as suggested by the Advisory Committee's note, is money damages rather than equitable remedies. (30) In specific circumstances, courts may also shape relief by delaying enforcement of the judgment (31) or requiring security. (32)

      The third factor under Rule 19(b) requires the Court to consider "whether a judgment rendered in the person's absence would be adequate." (33) Adequacy refers to the "public stake in settling disputes by wholes, whenever possible." (34) This factor also closely relates to the other factors considered under the Rule 19 analysis, particularly the "shaping of relief clause of (b)(2)(B) and the test for compulsory joinder set out in (a)(1)(A). (35)

      It is under this factor that courts often considered whether a judgment rendered without an absent party would bind that party under res judicata or collateral estoppel in any subsequent litigation. (36) Generally, res judicata is not a concern in matters of joinder because it applies only to those party to the initial proceeding that later attempt to litigate the same claim and in no way implicates unjoined parties. (37) However, res judicata and collateral estoppel bind those parties that are in privity with joined parties, which after the 2008 Supreme Court case, Taylor v. Sturgell, (38) also extends to those unjoined parties whose interests are "adequately represented" by parties to the suit. (39) Thus, courts often struggle in their approach to the adequate representation analy-sis. Adequate representation and privity historically cut in opposite directions in Rule 19 analysis but, following Taylor, they seem to be combined. For instance, in the contracts context, courts generally leave it up to the obligee to join the obligors it deems fit. (40) An exception to this, however, is when the absent obligor is in privity with a joined obligor. (41) When this is the case, courts traditionally considered it a factor that weighed in favor of indispensability. (42) In contrast, generally the ability of a joined party to adequately represent an absent party indicated the absent party was not indispensable. (43) The muddling of these two considerations makes this factor of the Rule 19 analysis...